State Legislature Extends Rent Regulation, 421-a

The New York State Capitol building in Albany. Image credit: Matt H. Wade

The New York State Capitol building in Albany. Image credit: Matt H. Wade

Deal is retroactive to the programs’ expiration on June 15.  On June 25, 2015 the New York State Legislature passed a bill extending rent-regulation protections for New York City.  The laws had expired on June 15, and the Legislature temporarily extended its session to allow time for working on a longer-term solution.  On March 11, the New York City Council passed an extension of the City’s rent-stabilization laws, as well as a package of resolutions calling for reform of rent-increase policies of regulated apartments, a total repeal of vacancy decontrol, and more.

The final bill extends rent-regulation for four years to June 15, 2019 and will take effect retroactively to June 15.  The bill also increases the vacancy decontrol threshold by $200 to $2,700, and decreases the vacancy bonus for preferential rent to 5, 10, 15, or 20 percent contingent on how long a unit was rented at the preferential rate.  Civil penalties are increased in instances of tenant harassment, as well as the amortization period for major capital improvements.

The bill also extends the 421-a tax abatement program for seven months with a provision for extension to June 15, 2019 in the event labor representatives and real estate interest groups reach a deal on wage protections for construction workers on projects receiving 421-a benefits.  In the event of expiration, current 421-a recipients will see their benefits extended to thirty-five years from the current twenty-five.  The 421-a extension also mandates tenants in 421-a buildings use the same entrance as opposed to constructing a “poor door”, authorizes the New York City Council to modify the Geographic Exclusion Area defining where 421-a affordable units are mandated, and requires wage protections for service workers in 421-a buildings.  The bill permits 421-a buildings with an 80/20 market-rate to affordable unit ratio to apply for new benefits in exchange for increases in the percentage of affordable units and the duration of the affordability period, and provides new development options for creating affordable units in the event a deal is reached between labor and developers.

The final bill was reached after a framework was announced by Governor Andrew Cuomo, joined by Assembly Speaker Carl Heastie and Senate Majority Leader John Flanagan. The proposal differs from one the Senate had introduced on June 20 which would have extended regulation protections by six years and immediately raised the vacancy decontrol cap by $100 to $2,600, with future increases tied to the Rent Guidelines Board’s annual decisions on cost of housing.  Other conditions in the original Senate proposal included new requirements for income verification among rent-regulated tenants and restrictions on using rent-regulated apartments for services like Airbnb.  The Senate also sought to extend 421-a for six years.

Both proposals differed from one originally introduced by the State Assembly.  Under the first Assembly plan, rent regulation would have been extended for only two years, but vacancy decontrol would be eliminated entirely.  The Assembly plan also contained no provisions for income verification or restrictions on Airbnb-style usage of a regulated unit, and was silent on an extension of 421-a.

By:  Michael Twomey (Michael is the CityLaw Fellow and a New York Law School graduate, Class of 2014).

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